Is the housing package enough?

September 2, 2008

housing.jpgThe government proposes to stimulate the housing market by scrapping stamp duty for a year on purchases of homes worth less than 175,000 pounds.

At the moment, the no-tax threshold is 125,000 pounds.

The government also plans to offer cheap loans of up to 30 percent of the purchase price of a house for first-time buyers. Households earning less than 60,000 pounds a year will not have to pay interest for five years on the loans, providing they buy newly built properties.

For the most vulnerable homeowners falling behind on mortgage payments, the government says councils or social housing landlords can pay off the debt and instead charge tenants rent “at a level they can afford”.

All this is good news for housebuilding companies of course but what do you think of the package as a means of relieving the constipation in the housing market as a whole? Is it enough to get first-time buyers back on the ladder and alleviate the effects of hardship caused by rising prices?

18 comments

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A very small step in the right direction.

Posted by david | Report as abusive

The New Labour government is nearing the end of its stealth tax run, having proved to itself that it can’t demand the lion’s share of people’s income without ill-effect. A pity this fact has taken so long to sink in. Meanwhile, Blair and the other rats leaving the sinking ship have run away with a lot of the loot.

Posted by Jim xxxx | Report as abusive

Socialist measures(aimed at the lower paid and people in the north) to solve an economic problem.It won’t help the housing market or the economy much nor will it go any way toward saving Gordon Brown’s backside.

Posted by ROGER POTTER | Report as abusive

By the time the buyers move in, the value of the property purchased will have fallen more than the stamp duty saving. Nice one Gordon!

Posted by Dave James | Report as abusive

Agree with Roger Potter’s comments about this being a socialist move. Stamp duty has always been a hugely unfair tax – weighted against those working in the South where properties under £175,000 are as rare as hen’s teeth. The whole banding needs to be overhauled.

Posted by Amanda Willsmith | Report as abusive

I don’t see why I should pay tax to subsidise homeowners. I don’t own a home, but must subsidise the purchase of a property from which I will derive no benefit. I get no subsidy of any kind for anything at all in my life and pay 40% tax to the poltroons who claim to be our “leaders”. May they be taken up in the mother ship and whisked away to another planet.

Posted by Neil, London | Report as abusive

Enough to do what? If the purpose is to help Government popularity and get some good headlines, it might be a very short term fix.

If is it to help the housing market, not enough- stamp duty cut will be eaten up next month. Encouraging first time buyers to buy now, when house prices are falling fast, is activelly encouraging people into negative equity. This is an activelly silly and badly thought out policy.

More generally, why should taxpayers money be used to help the housing market when it is falling? It would have been better to stop prices rising to such ludicrously high levels over the last few years- but of course that would not have been popular.

Posted by Joe F | Report as abusive

In summary: The Government will spend £600M propping up house prices, followed by £400M trying to provide cheaper housing. It doesn’t make any sense!

Posted by ziknik | Report as abusive

It might help a very small number of people but I can’t think this is the kick-start the housing market is alleged to need – and good too: we need house prices to fall at least 15% further so they are affordable under the stricter lending rules that mimic those in the 1970s/1980s. No one wants to be lumbered with a 25-30 year debt sucking in most of their wages, merely to get a reasonable roof over their heads.

As I see it, the stamp duty relief will at least bolster the flagging profits of housebuilders who can now charge 1% more for their starter homes. No doubt they’ll feel relieved.

Posted by Dane Aubrun | Report as abusive

Can we just let house prices come back down to sustainable levels now. I’d like to buy one. Maybe in two or three years time…

Posted by Patrick Baxter | Report as abusive

If a first time buyer can’t afford to pay stamp duty you would have to question if they can afford to buy property in first place.

Also, the idea of government helping first time buyers to buy a brand new house might help the builders but it won’t help the housing market. There needs to be activity on the lower rung of the ladder on all houses not just new ones to enable the chains further up to operate.

Another ill thought out idea, this government seems incabable of looking outside the box, looking at consequences beyond a quick fix, a bit like the 10p tax fiasco, the inheritance tax and the non-domicile tax.

Posted by R Boyles | Report as abusive

Why did they do away with tax relief for mortgage payments, or why is it not being condsidered for re-introduction?

Posted by KKJ | Report as abusive

Fool’s Gold.

Fool’s who are tempted to borrow it and fools (taxpayers) whose money is being stolen to provide it.

Posted by Peter | Report as abusive

The general consensus is that house prices will fall further. Buy now and your likely to get into negative equity quickly. The government needs to do something on the high interest rates.

Posted by Chay | Report as abusive

How can a move intended to support the housing market, in other words to stop prices falling, make it easier for first-time buyers to buy? Is this man on another planet or does he think that we are, or both?

We’ve got those Bremner, Bird and Fortune characters running the bloody country!

Posted by Matthew | Report as abusive

How can one describe what this government has not only done but seems “hell bent” in doing to the country. Raise stamp duty threshold to a figure that is still well below the average price for decent housing, make offers to both first time buyers and the elderly with tit-bits to what??? vote for me please.

We can all call them, get mad at them, loose our property through them, loose our job …possibly by their actions…loose value in our holiday cash..saved through the year or paid extra by c/card.

The list goes on and on, and will for the next two years maybe!!

There is only one sure thing that will happen, in spite of all the mess they have made and quite possibly will continue to make, They will still get paid.

Would you if you made mistakes like this??

Its time to go.

moan, moan ,moan,…. the government tries to help and all they get is whinging brits. at least its a step in the right direction.

can’t wait to see the moan list if (woe betide) cameron(i’ll do anyhting to get elected)ever gets in….

Posted by r.u.down | Report as abusive

Simply put, why would anybody rush to save 1% on stamp duty when they could wait and save more in a falling market. A pointless move from an increasingly pointless government.

Posted by David Cox | Report as abusive